4 Top Loyalty Stories of 2018

Customer engagement and loyalty weren’t new concepts in 2018, but they did undergo a kind of renaissance. As brands learned that loyal customers spend 67 percent more than new customers, we saw more attention turn to customer retention and churn reduction. In order to achieve this target, personalization took the front seat to an entirely new degree. Brands wanted a seamless loyalty experience where they could reward their best customers with tailored and exclusive perks.

These shifts in priorities fueled several stories in 2018 that can be seen as key indicators of the changing loyalty landscape.

The Revival of the Loyalty Program

Loyalty programs of the past were all about points, punch cards and discounts. From the grocery store and drugstore to restaurants and nail salons, consumers would be “members” in several programs at once – often too many to count or remember.

While 82 percent of Gen X is still active in at least one loyalty program, 88 percent of consumers max out at five. This culling has forced brands to rethink their programs, putting the individual customer and their preferences at the center.

Look no further than The Nordy Club from Nordstrom or Uber Rewards for companies making this move in the right way. Both are streamlined within the user’s experience, offering perks and experiences based on engagement and spend. Uber in particular is aiming to surprise and delight with benefits like unexpected upgrades for its loyal riders. These companies are taking advantage of the fact that 76 percent of customers feel that receiving personalized discount offers based on their purchase history is important and 68 percent of Americans say exclusive offers are more important than traditional coupons that are available to everyone.

Embracing Digital Wallets

Another way brands are streamlining the experience for their customers is by baking digital payment options into loyalty programs. This serves brands well by enabling them to reduce dependence on credit card companies (which rack up billions of dollars in swipe fees each year), while also allowing them to capture more first-party data from those consumers willing to engage.

Companies like Walmart, Starbucks, and Kohl’s have already seen success with injecting mobile payments into their loyalty programs, and more than half of companies surveyed recently by the National Retail Federation said they’ve implemented “branded digital wallets” or are considering it. Promotions are the #1 driver for consumers to use their mobile wallet, so we’re sure to see more of these stories emerging in the years to come.

The Great Privacy Debate

We can’t escape 2018 without acknowledging the elephant in the room. From the Facebook and Cambridge Analytica scandals to Europe’s GDPR, privacy was one of the most hotly debated topics of the year. Consumers took back the power, demanding control over their personal information and how it’s used. In fact, 63 percent of Americans said knowing a brand wouldn’t share the personal information needed to redeem an exclusive offer is extremely important to them.

So how are brands to use consumer data without crossing the privacy line? According to one study, consumers are most interested in exchanging their data for automatic credits for coupons and loyalty points (64 percent) and access to exclusive deals (60 percent), followed by the ability to gain points and rewards (56 percent) and special offers for items that interest them (53 percent). 87 percent of loyalty program members say they’re open to having various details of their activity and behavior watched, monitored and traced in order to receive access to personalized rewards or engagements. Another 52 percent of Americans said they would let a retailer know their purchase history in exchange for coupons or other promotional discounts.

While it still takes consumer consent to use data correctly, brands focused on delivering personalized experiences and real value to consumers based on their information are the ones winning as we head into the new year.

Artificial Intelligence Gets Practical

Coming off of the AI hype of 2017, brands began taking a more practical look at how they’re applying AI within their marketing stacks in 2018. Much of the benefit they looked to extract speaks to the other top stories of 2018 – personalization at a one-to-one scale will be the major benefactor of this technology. Using AI, brands are able to better understand an individual consumer’s wants and needs. They are also gaining the ability to take action based on those insights, giving them a new opportunity to maximize their surprise-and-delight moments.

At the end of 2018, only 22 percent of global consumers agreed that the offers they receive from retailers are always personalized or always relevant. This poorly personalized experience has led 48 percent of consumers to leave a brand’s website and purchase from a competitor. Expect that dynamic to change dramatically as data and sophisticated loyalty programs combine to revolutionize the customer experience in 2019 and beyond.